Union finance minister Nirmala Sitharaman continued her endeavour to boost liquidity in the Indian economy to help combat slowdown blues. In a press briefing after meeting public sector bank chiefs, she announced that stressed MSMEs would not be categorised as non-performing assets (NPAs) till FY20 (March 31, 2020) end.

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Further, Sitharaman said the government is reviewing liquidity situation with banks and has identified some NBFCs that they can lend to.

To give credit, public sector banks will hold meetings with NBFCs and retail borrowers in 400 districts beginning next week to provide credit to borrowers, including homebuyers and farmers.

The public meetings will be held in two tranches. The first will be held between Tuesday (September 24) and September 29 in 200 districts and another 200 districts will be covered between October 10 and 15, the minister said.

She said the idea is to ensure maximum credit disbursal during the festive season. Diwali, which falls in October this year, is considered as the biggest shopping season of the country.

During the public meetings, the credit will be provided for retail, agriculture, MSME and housing sector, among others.

The finance minister also said, "For every one existing customer, banks will have to bring five fresh customers for loans."

Reacting to finance minister's announcement, Sanjay Dutt of Quantum Securities said, "The initiatives taken by Nirmala Sitharaman are excellent in ensuring that credit availability is easier and banks are actually pushed to lend. However, the concerns about MSME loan provisioning, particularly SMA 1, SMA 2 accounts or stressed accounts need not be provided for as yet as NPAs. This basically comes down to a fundamental issue of credit discipline which RBI has been trying to enforce amongst banks for many years now and most banks are just getting out of the NPA provisioning cycle etc."

First Published:Sept 19, 2019 8:08 PM IST